BILL NUMBER: SB 1092	CHAPTERED  07/28/99

	CHAPTER   212
	FILED WITH SECRETARY OF STATE   JULY 28, 1999
	APPROVED BY GOVERNOR   JULY 27, 1999
	PASSED THE SENATE   JULY 15, 1999
	PASSED THE ASSEMBLY   JULY 6, 1999
	AMENDED IN ASSEMBLY   JUNE 22, 1999
	AMENDED IN SENATE   MAY 10, 1999
	AMENDED IN SENATE   APRIL 21, 1999

INTRODUCED BY   Senator O'Connell

                        FEBRUARY 26, 1999

   An act to amend Sections 2981 and 2982 of, and to repeal Section
2982.2 of, the Civil Code, relating to conditional sales contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1092, O'Connell.  Conditional sales contracts:  motor vehicles.

   Existing law requires specified conditional sale contracts for the
sale of motor vehicles to contain specified disclosures.  Existing
law defines "cash price" for purposes of these provisions to mean the
amount for which the seller would sell and transfer to the buyer
unqualified title to the motor vehicle described in the contract, if
the property were sold for cash, as specified, and includes, among
other things, the cash price of accessories or services related to
the sale.
   This bill would revise the definition of "cash price" to also
include payment of a prior credit or lease balance remaining on
property being traded in.  It would also revise the disclosure
requirements with regard to property being traded in, as specified.
   This bill would also repeal a provision of existing law that
requires a conditional sale contract executed after June 30, 1994, to
contain a notice pursuant to a repealed provision of law.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 2981 of the Civil Code is amended to read:
   2981.  As used in this chapter, unless the context otherwise
requires:
   (a) "Conditional sale contract" means:
   (1) Any contract for the sale of a motor vehicle between a buyer
and a seller, with or without accessories, under which possession is
delivered to the buyer and either (A) the title vests in the buyer
thereafter only upon the payment of all or a part of the price, or
the performance of any other condition, or (B) a lien on the property
is to vest in the seller as security for the payment of part or all
of the price, or for the performance of any other condition, or
   (2) Any contract for the bailment of a motor vehicle between a
buyer and a seller, with or without accessories, by which the bailee
or lessee agrees to pay as compensation for use a sum substantially
equivalent to or in excess of the aggregate value of the vehicle and
its accessories, if any, at the time the contract is executed, and by
which it is agreed that the bailee or lessee will become, or for no
other or for a nominal consideration has the option of becoming, the
owner of the vehicle upon full compliance with the terms of the
contract.
   (b) "Seller" means a person engaged in the business of selling or
leasing motor vehicles under conditional sale contracts.
   (c) "Buyer" means the person who buys or hires a motor vehicle
under a conditional sale contract.
   (d) "Person" includes an individual, company, firm, association,
partnership, trust, corporation, limited liability company, or other
legal entity.
   (e) "Cash price" means the amount for which the seller would sell
and transfer to the buyer unqualified title to the motor vehicle
described in the conditional sale contract, if the property were sold
for cash at the seller's place of business on the date the contract
is executed, and shall include taxes to the extent imposed on the
cash sale and the cash price of accessories or services related to
the sale such as delivery, installation, alterations, modifications,
improvements, document preparation fees, a service contract, and
payment of a prior credit or lease balance remaining on property
being traded in.
   (f) "Downpayment" means any payment which the buyer pays or agrees
to pay to the seller in cash or property value or money's worth at
or prior to delivery by the seller to the buyer of the motor vehicle
described in the conditional sale contract.  The term shall also
include the amount of any portion of the downpayment the payment of
which is deferred until not later than the due date of the second
otherwise scheduled payment, if the amount of the deferred
downpayment is not subject to a finance charge.  The term does not
include any administrative finance charge charged, received or
collected by the seller as provided in this chapter.
   (g) "Amount financed" means the amount required to be disclosed
pursuant to paragraph (8) of subdivision (a) of Section 2982.
   (h) "Unpaid balance" means the difference between (e) and (f),
plus all insurance premiums (except for credit life or disability
insurance when the amount thereof is included in the finance charge),
which are included in the contract balance, and the total amount
paid or to be paid (1) to any public officer in connection with the
transaction, and (2) for license, certificate of title, and
registration fees imposed by law, and the amount of the state fee for
issuance of a certificate of compliance or certificate of waiver
pursuant to Section 9889.56 of the Business and Professions Code.
   (i) "Finance charge" has the meaning set forth for that term in
Section 226.4 of Regulation Z.  The term shall not include
delinquency charges or collection costs and fees as provided by
subdivision (k) of Section 2982, extension or deferral agreement
charges as provided by Section 2982.3, or amounts for insurance,
repairs to or preservation of the motor vehicle, or preservation of
the security interest therein advanced by the holder under the terms
of the contract.
   (j) "Total of payments" means the amount required to be disclosed
pursuant to subdivision (h) of Section 226.18 of Regulation Z.  The
term includes any portion of the downpayment which is deferred until
not later than the second otherwise scheduled payment and which is
not subject to a finance charge.  The term shall not include amounts
for which the buyer may later become obligated under the terms of the
contract in connection with insurance, repairs to or preservation of
the motor vehicle, preservation of the security interest therein, or
otherwise.
   (k) "Motor vehicle" means any vehicle required to be registered
under the Vehicle Code which is bought for use primarily for personal
or family purposes, and does not mean any vehicle which is bought
for use primarily for business or commercial purposes or a
mobilehome, as defined in Section 18008 of the Health and Safety Code
which is sold on or after July 1, 1981.  "Motor vehicle" does not
include any trailer which is sold in conjunction with a vessel and
which comes within the definition of "goods" under Section 1802.1.
   (l) "Purchase order" means a sales order, car reservation,
statement of transaction or any other such instrument used in the
conditional sale of a motor vehicle pending execution of a
conditional sale contract.  The purchase order shall conform to the
disclosure requirements of subdivision (a) of Section 2982 and
Section 2984.1 and the provisions of subdivision (m) of Section 2982
shall be applicable thereto.
   (m) "Regulation Z" means any rule, regulation or interpretation
promulgated by the Board of Governors of the Federal Reserve System ("
Board") under the federal Truth in Lending Act, as amended (15 U.S.C.
1601, et seq.), and any interpretation or approval issued by an
official or employee of the Federal Reserve System duly authorized by
the board under the Truth in Lending Act, as amended, to issue such
interpretations or approvals.
   (n) "Simple-interest basis" means the determination of a finance
charge, other than an administrative finance charge, by applying a
constant rate to the unpaid balance as it changes from time to time
either:
   (1) Calculated on the basis of a 365-day year and actual days
elapsed (although the seller may, but need not, adjust its
calculations to account for leap years); reference in this chapter to
the "365-day basis" shall mean this method of determining the
finance charge, or
   (2) For contracts entered into prior to January 1, 1988,
calculated on the basis of a 360-day year consisting of 12 months of
30 days each and on the assumption that all payments will be received
by the seller on their respective due dates; reference in this
chapter to the "360-day basis" shall mean this method of determining
the finance charge.
   (o) "Precomputed basis" means the determination of a finance
charge by multiplying the original unpaid balance of the contract by
a rate and multiplying that product by the number of payment periods
elapsing between the date of the contract and the date of the last
scheduled payment.
   (p) "Service contract" means a contract in writing to perform,
over a fixed period of time or for a specified duration, services
relating to the maintenance or repair, or both, of the motor vehicle
described in the conditional sale contract.
  SEC. 2.  Section 2982 of the Civil Code is amended to read:
   2982.  Every conditional sale contract subject to this chapter
shall contain the disclosures required by Regulation Z whether or not
Regulation Z applies to the transaction.  In addition, to the extent
applicable, the contract shall contain the other disclosures and
notices required by, and shall satisfy the requirements and
limitations of, this section.  The disclosures required by
subdivision (a) may be itemized or subtotaled to a greater extent
than as required by that subdivision and shall be made together and
in the sequence set forth in that subdivision.  All other disclosures
and notices may appear in the contract in any location or sequence
and may be combined or interspersed with other provisions of the
contract.
   (a) The contract shall contain the following disclosures, as
applicable, which shall be labeled "itemization of the amount
financed":
   (1) (A) The cash price, exclusive of document preparation fees,
taxes imposed on the sale, pollution control certification fees,
prior credit or lease balance on property being traded in, and the
amount charged for a service contract.
   (B) The fee to be retained by the seller for document preparation.

   (C) The fee charged by the seller for certifying that the motor
vehicle complies with applicable pollution control requirements.
   (D) Taxes imposed on the sale.
   (E) The amount charged for a service contract.
   (F) The prior credit or lease balance remaining on property being
traded in, as required by paragraph (6).  The disclosure required by
this subparagraph shall be labeled "prior credit or lease balance
(see downpayment and trade-in calculation)."
   (G) The total cash price, which is the sum of subparagraphs (A) to
(F), inclusive.
   (2) Amounts paid to public officials for the following:
   (A) Vehicle license fees.
   (B) Registration, transfer, and titling fees.
   (C) Smog impact fees.
   (3) The aggregate amount of premiums agreed, upon execution of the
contract, to be paid for policies of insurance included in the
contract, excluding the amount of any insurance premium included in
the finance charge.
   (4) The amount of the state fee for issuance of a certificate of
compliance, noncompliance, exemption, or waiver pursuant to any
applicable pollution control statute.
   (5) A subtotal representing the sum of the foregoing items.
   (6) The amount of the buyer's downpayment itemized to show the
following:
   (A) The agreed value of the property being traded in.
   (B) The prior credit or lease balance, if any, owing on the
property being traded in.
   (C) The net agreed value of the property being traded in, which is
the difference between the amounts disclosed in subparagraphs (A)
and (B).  If the prior credit or lease balance of the property being
traded in exceeds the agreed value of the property, a negative number
shall be stated.
   (D) The amount of any portion of the downpayment to be deferred
until not later than the due date of the second regularly scheduled
installment under the contract and which is not subject to a finance
charge.
   (E) The amount of any manufacturer's rebate applied or to be
applied to the downpayment.
   (F) The remaining amount paid or to be paid by the buyer as a
downpayment.
   (G) The total downpayment.  If the sum of subparagraphs (C) to
(F), inclusive, is zero or more, that sum shall be stated as the
total downpayment and no amount shall be stated as the prior credit
or lease balance under subparagraph (F) of paragraph (1).  If the sum
of subparagraphs (C) to (F), inclusive, is less than zero, then that
sum, expressed as a positive number, shall be stated as the prior
credit or lease balance under subparagraph (F) of paragraph (1), and
zero shall be stated as the total downpayment.  The disclosure
required by this subparagraph shall be labeled "total downpayment"
and shall contain a descriptor indicating that if the total
downpayment is a negative number, a zero shall be disclosed as the
total downpayment and a reference made that the remainder shall be
included in the disclosure required pursuant to subparagraph (F) of
paragraph (1).
   (7) The amount of any administrative finance charge, labeled
"prepaid finance charge."
   (8) The difference between item (5) and the sum of items (6) and
(7), labeled "amount financed."
   (b) No particular terminology is required to disclose the items
set forth in subdivision (a) except as expressly provided in that
subdivision.
   (c) If payment of all or a portion of the downpayment is to be
deferred, the deferred payment shall be reflected in the payment
schedule disclosed pursuant to Regulation Z.
   (d) If the downpayment includes property being traded in, the
contract shall contain a brief description of that property.
   (e) The contract shall contain the names and addresses of all
persons to whom the notice required under Section 2983.2 and
permitted under Sections 2983.5 and 2984 is to be sent.
   (f) (1) Where the contract includes a finance charge determined on
the precomputed basis, the contract shall identify the method of
computing the unearned portion of the finance charge in the event of
prepayment in full of the buyer's obligation and contain a statement
of the amount or method of computation of any charge that may be
deducted from the amount of any unearned finance charge in computing
the amount that will be credited to the obligation or refunded to the
buyer.  The method of computing the unearned portion of the finance
charge shall be sufficiently identified with a reference to the
actuarial method if the computation will be under that method.  The
method of computing the unearned portion of the finance charge shall
be sufficiently identified with a reference to the Rule of 78's, the
sum of the digits, or the sum of the periodic time balances method in
all other cases, and those references shall be deemed to be
equivalent for disclosure purposes.
   (2) Where the contract includes a finance charge which is
determined on the simple-interest basis but provides for a minimum
finance charge in the event of prepayment in full, the contract shall
contain a statement of that fact and the amount of the minimum
finance charge or its method of calculation.
   (g) (1) Where the contract includes a finance charge which is
determined on the precomputed basis and provides that the unearned
portion of the finance charge to be refunded upon full prepayment of
the contract is to be determined by a method other than actuarial,
the contract shall contain a notice, in at least 10-point boldface
type if the contract is printed, reading as follows:  "Notice to
buyer:  (1) Do not sign this agreement before you read it or if it
contains any blank spaces to be filled in.  (2) You are entitled to a
completely filled-in copy of this agreement.  (3) You can prepay the
full amount due under this agreement at any time and obtain a
partial refund of the finance charge if it is $1 or more.  Because of
the way the amount of this refund will be figured, the time when you
prepay could increase the ultimate cost of credit under this
agreement.  (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
   (2) Where the contract includes a finance charge which is
determined on the precomputed basis and provides for the actuarial
method for computing the unearned portion of the finance charge upon
prepayment in full, the contract shall contain a notice, in at least
10-point boldface type if the contract is printed, reading as
follows:  "Notice to buyer:  (1) Do not sign this agreement before
you read it or if it contains any blank spaces to be filled in.  (2)
You are entitled to a completely filled-in copy of this agreement.
(3) You can prepay the full amount due under this agreement at any
time and obtain a partial refund of the finance charge if it is $1 or
more.  (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
   (3) Where the contract includes a finance charge which is
determined on the simple-interest basis, the contract shall contain a
notice, in at least 10-point boldface type if the contract is
printed, reading as follows:  "Notice to buyer:  (1) Do not sign this
agreement before you read it or if it contains any blank spaces to
be filled in.  (2) You are entitled to a completely filled-in copy of
this agreement.  (3) You can prepay the full amount due under this
agreement at any time.  (4) If you default in the performance of your
obligations under this agreement, the vehicle may be repossessed and
you may be subject to suit and liability for the unpaid indebtedness
evidenced by this agreement."
   (h) The contract shall contain a notice in at least 8-point
boldface type, acknowledged by the buyer, that reads as follows:

   "If you have a complaint concerning this sale, you should try to
resolve it with the seller.
   Complaints concerning unfair or deceptive practices or methods by
the seller may be referred to the city attorney, the district
attorney, or an investigator for the Department of  Motor Vehicles,
or any combination thereof.
   After this contract is signed, the seller may not change the
financing or payment terms unless you agree in writing to the change.
  You do not have to agree to any change, and it is an unfair or
deceptive practice for the seller to make a unilateral change.


    ______________________________
          Buyer's Signature"

   (i) (1) The contract shall contain an itemization of any insurance
included as part of the amount financed disclosed pursuant to
paragraph (3) of subdivision (a) and of any insurance included as
part of the finance charge.  The itemization shall identify the type
of insurance coverage and the premium charged therefor, and, if the
insurance expires before the date of the last scheduled installment
included in the repayment schedule, the term of the insurance shall
be stated.
   (2) If any charge for insurance (other than for credit life or
disability) is included in the contract balance and disbursement of
any part thereof is to be made more than one year after the date of
the conditional sale contract, any finance charge on the amount to be
disbursed after one year shall be computed from the month the
disbursement is to be made to the due date of the last installment
under the conditional sale contract.
   (j) (1) Except for contracts in which the finance charge or
portion thereof is determined by the simple-interest basis and the
amount financed disclosed pursuant to paragraph (8) of subdivision
(a) is more than two thousand five hundred dollars ($2,500), the
dollar amount of the disclosed finance charge shall not exceed the
greater of:
   (A) (i) One and one-half percent on so much of the unpaid balance
as does not exceed two hundred twenty-five dollars ($225), 11/6
percent on so much of the unpaid balance in excess of two hundred
twenty-five dollars ($225) as does not exceed nine hundred dollars
($900) and 5/6 of 1 percent on so much of the unpaid balance in
excess of nine hundred dollars ($900) as does not exceed two thousand
five hundred dollars ($2,500); or
   (ii) One percent of the entire unpaid balance; multiplied in
either case by the number of months (computed on the basis of a full
month for any fractional month period in excess of 15 days) elapsing
between the date of the contract and the due date of the last
installment; or
   (B) If the finance charge is determined by the precomputed basis,
twenty-five dollars ($25); or
   (C) If the finance charge or a portion thereof is determined by
the simple-interest basis:
   (i) Twenty-five dollars ($25) if the unpaid balance does not
exceed one thousand dollars ($1,000), (ii) fifty dollars ($50) if the
unpaid balance exceeds one thousand dollars ($1,000) but does not
exceed two thousand dollars ($2,000), or (iii) seventy-five dollars
($75) if the unpaid balance exceeds two thousand dollars ($2,000).
   (2) The holder of the contract shall not charge, collect, or
receive a finance charge which exceeds the disclosed finance charge,
except to the extent (A) caused by the holder's receipt of one or
more payments under a contract which provides for determination of
the finance charge or a portion thereof on the 365-day basis at a
time or times other than as originally scheduled whether or not the
parties enter into an agreement pursuant to Section 2982.3, (B)
permitted by paragraph (2), (3), or (4) of subdivision (c) of Section
226.17 of Regulation Z, or (C) permitted by subdivisions (a) and (c)
of Section 2982.8.
   (3) If the finance charge or a portion thereof is determined by
the simple-interest basis and the amount of the unpaid balance
exceeds five thousand dollars ($5,000), the holder of the contract
may, in lieu of its right to a minimum finance charge under
subparagraph (C) of paragraph (1), charge, receive, or collect on the
date of the contract an administrative finance charge not to exceed
seventy-five dollars ($75), provided that the sum of the
administrative finance charge and the portion of the finance charge
determined by the simple-interest basis shall not exceed the maximum
total finance charge permitted by subparagraph (A) of paragraph (1).
Any administrative finance charge which is charged, received, or
collected by a holder shall be deemed a finance charge earned on the
date of the contract.
   (4) When a contract provides for unequal or irregular payments, or
payments on other than a monthly basis, the maximum finance charge
shall be at the effective rate provided for in paragraph (1), having
due regard for the schedule of installments.
   (k) The contract may provide that for each installment in default
for a period of not less than 10 days the buyer shall pay a
delinquency charge in an amount not to exceed in the aggregate 5
percent of the delinquent installment, which amount may be collected
only once on any installment regardless of the period during which it
remains in default.  Payments timely received by the seller under an
extension or deferral agreement shall not be subject to a
delinquency charge unless the charge is permitted by Section 2982.3.
The contract may provide for reasonable collection costs and fees in
the event of delinquency.
   (l) Notwithstanding any provision of a contract to the contrary,
the buyer may pay at any time before maturity the entire indebtedness
evidenced by the contract without penalty.  In the event of
prepayment in full:
   (1) If the finance charge was determined on the precomputed basis,
the amount required to prepay the contract shall be the outstanding
contract balance as of that date, provided, however, that the buyer
shall be entitled to a refund credit in the amount of the unearned
portion of the finance charge, except as provided in paragraphs (3)
and (4).  The amount of the unearned portion of the finance charge
shall be at least as great a proportion of the finance charge,
including any additional finance charge imposed pursuant to Section
2982.8 or other additional charge imposed because the contract has
been extended, deferred, or refinanced, as the sum of the periodic
monthly time balances payable more than 15 days after the date of
prepayment bears to the sum of all the periodic monthly time balances
under the schedule of installments in the contract or, if the
contract has been extended, deferred, or refinanced, as so extended,
deferred, or refinanced.  Where the amount of the refund credit is
less than one dollar ($1), no refund credit need be made by the
holder.  Any refund credit may be made in cash or credited to the
outstanding obligations of the buyer under the contract.
   (2) If the finance charge or a portion thereof was determined on
the simple-interest basis, the amount required to prepay the contract
shall be the outstanding contract balance as of that date, including
any earned finance charges which are unpaid as of that date and, if
applicable, the amount provided in paragraph (3), and provided
further that in cases where a finance charge is determined on the
360-day basis, the payments theretofore received will be assumed to
have been received on their respective due dates regardless of the
actual dates on which the payments were received.
   (3) Where the minimum finance charge provided by subparagraph (B)
or subparagraph (C) of paragraph (1) of subdivision (j), if either is
applicable, is greater than the earned finance charge as of the date
of prepayment, the holder shall be additionally entitled to the
difference.
   (4) The provisions of this subdivision shall not impair the right
of the seller or the seller's assignee to receive delinquency charges
on delinquent installments and reasonable costs and fees as provided
in subdivision (k) or extension or deferral agreement charges as
provided in Section 2982.3.
   (5) Notwithstanding any provision of a contract to the contrary,
whenever the indebtedness created by any contract is satisfied prior
to its maturity through surrender of the motor vehicle, repossession
of the motor vehicle, redemption of the motor vehicle after
repossession, or any judgment, the outstanding obligation of the
buyer shall be determined as provided in paragraph (1) or (2);
provided further that the buyer's outstanding obligation shall be
computed by the holder as of the date the holder recovers the value
of the motor vehicle through disposition thereof or judgment is
entered or, if the holder elects to keep the motor vehicle in
satisfaction of the buyer's indebtedness, as of the date the holder
takes possession of the motor vehicle.
   (m) Notwithstanding any other provision of this chapter to the
contrary, any information required to be disclosed in a conditional
sale contract under this chapter may be disclosed in any manner,
method, or terminology required or permitted under Regulation Z, as
in effect at the time that disclosure is made, except that permitted
by paragraph (2) of subdivision (c) of Section 226.18 of Regulation
Z, provided that all of the requirements and limitations set forth in
subdivision (a) of this section are satisfied.  Nothing in this
chapter prohibits the disclosure in that contract of additional
information required or permitted under Regulation Z, as in effect at
the time that disclosure is made.
   (n) If the seller imposes a fee for document preparation, the
contract shall contain a disclosure that the fee is not a
governmental fee.
   (o) No seller may impose an application fee for a transaction
governed by this chapter.
   (p) The seller or holder may charge and collect a fee not to
exceed fifteen dollars ($15) for the return by a depository
institution of a dishonored check, negotiated order of withdrawal, or
share draft issued in connection with the contract, if the contract
so provides or if the contract contains a generalized statement that
the buyer may be liable for collection costs incurred in connection
with the contract.
   (q) The contract shall disclose on its face, by printing the word
"new" or "used" within a box outlined in red, that is not smaller
than one-half inch high and one-half
            inch wide, whether the vehicle is sold as a new vehicle,
as defined in Section 430 of the Vehicle Code, or a used vehicle, as
defined in Section 665 of the Vehicle Code.
   (r) The contract shall contain a notice with a heading in at least
12-point bold type and the text in at least 10-point bold type,
circumscribed by a line, immediately above the contract signature
line, that reads as follows:


___________________________________________________________________
:                                                                 :
:                THERE IS NO COOLING OFF PERIOD                   :
:                                                                 :
:     California law does not provide for a "cooling off" or      :
:  other cancellation period for vehicle sales.  Therefore, you   :
:  cannot later cancel this contract simply because you change    :
:  your mind, decide the vehicle costs too much, or wish you had  :
:  acquired a different vehicle.  After you sign below, you may   :
:  only cancel this contract with the agreement of the seller     :
:  or for legal cause, such as fraud.                             :
:                                                                 :
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  SEC. 3.  Section 2982.2 of the Civil Code is repealed.
